International Financial Management
14th Edition
ISBN: 9780357130698
Author: Madura
Publisher: Cengage
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Assume that the U.S. inflation rate is higher than the New Zealand inflation rate. This will cause U.S. consumers to ____ their imports from New Zealand and New Zealand consumers to ____ their imports from the U.S. According to purchasing power parity (PPP), this will result in a(n) ____ of the New Zealand dollar (NZ$).
A. reduce; increase; depreciation
B. reduce; increase; appreciation
C. reduce; increase; appreciation
D. increase; reduce; appreciation
If Canada's inflation is higher than the U.S., the Canadian exports to the U.S. should ____, its imports should ____, and there is downward pressure on its currency's equilibrium value.
A.
decrease; increase
B.
decrease; decrease
C.
increase; decrease
D.
decrease; increase
If the U.S. dollar has fallen in comparison with foreign currencies, which of the following statements is TRUE?
U.S. products cost more for foreign consumers.
U.S. exports are likely to fall.
Foreign currencies buy fewer U.S. dollars.
U.S exports increase.
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